Trust, not greed, will drive prosperity in an independent Scotland

When we talk about economics, we talk about currency, about GDP growth, productivity, wage growth, the balance of trade and interest rates, even how the FTSE is trading. But all of these are insignificant economic measures compared to the one we hardly bother to monitor at all – trust.

Trust is the building block of all successful economies yet, as a political and economic concept, it is also one of the least understood by policy makers.

I am not just talking about trust in currency, which is one of the most visible examples. Have a look at a £5 note. Mine says: “The Bank of Scotland promises to pay the bearer on demand five pounds sterling at the head office in Edinburgh.”

Ask yourself what the pound is if all you have is an IOU for five of them. Money only exists as long as we all believe its worth something, not sterling but worth that thing we are hoping to buy.

Currency is simply a physical manifestation of trust, and the more trust there is in a society, the more developed an economy can become. Trust is driven through society and determined by levels of interdependence and reciprocity underpinned by a sense of economic fairness. People don’t mind that others do better or are wealthier than they are, they just want to feel they have the opportunity to thrive themselves, and when they feel there is a barrier to their own advancement then their trust in society starts to break down.

You see from the moment you are born you are reliant on people – on the doctor or midwife that delivers you, on the neonatal nurse, on your mother and father for sure, but also on the hospital cleaner for the safe environment. In fact, you’re reliant on all the administrators helping run the hospital that put those medical experts in the room to deliver you.

There has never been a time when you were not dependent on society for your survival and wellbeing. From cradle to the grave we are inexorably connected to and dependent upon the civilised and helpful behaviours of others.

People living in nations with higher levels of societal trust earn more, live longer, lead healthier and happier lives and are more content. OECD research shows a clear correlation between higher levels of social trust and GDP growth. That’s right – it is a mathematically measurable phenomenon that a stronger society results in stronger economic growth, because that growth is more widely shared.

Scandinavian nations enjoy higher levels of social trust. They also have higher taxes and greater welfare provision by their governments.

Wages are also high and so people’s overall value equation is better than in low-tax nations. Yes, you get taxed more, but you also get paid a lot more, so you are better off in terms of retained income and your society is stronger. This simply means that you can then become better off again, in an upwardly spiralling reciprocal relationship between society and economy.

The opposite is true in UK where trust is lower. Eurostat research on levels of trust in people lists the UK at 15th while Denmark is first, Finland second, Norway third, and Iceland fourth.

The myth of individualism or selfishness as a driver of economic success is, therefore, nothing more than the act of denying the truth that society is what nurtures us. The pursuit of wealth at the expense of society (sociopathic wealth creation) is, in effect, an attack on the very mechanism that facilitates the creation of that wealth.

It is worth pointing out that the World Values Survey points to Scandinavian people also leading the world in support for individual autonomy. They see government intervention as enabling individual success and so largely reject the extremes of individualism versus communism that dominate our political discourse.

In the UK, the Westminster electoral system is designed to maintain extremes. Unlike in Scotland, the UK’s first-past-the-post system does not create the smorgasbord of political views and policy ideas that generate enlightened compromise. A left-wing majority and a right-wing majority are as damaging as each other and a centralist majority creates an insipid, ineffectual government helping no-one. Majority politics lacks a mechanism to negotiate prosperity creating trade-offs between left and right.

The vast majority of the UK’s press and media are controlled by a handful of tax-exile media barons. In other words, super-rich people with a vested interest in maintaining the sociopathic wealth creation machine. The media present abnormal billionaire behaviour as heroic (Trump and Lord Sugar).

They present the poor as unworthy, dole-dodging, drug and alcohol abusers, and try to convince us the welfare money they receive is wasted. TV programmes such as The Scheme (BBC) and Benefits Britain – Life on the Dole (Channel 4) add fuel to this and every second Daily Mail or Express headline berates the less well-off and diminishes our trust in people around us. This explains my oft-repeated theory that Jeremy Corbyn cannot become PM. There just isn’t enough trust to elect him. People like the idea of a stronger society, but they don’t trust each other enough to vote for a bigger society and as he represents an extreme, he would also fail if he was ever elected PM.

Brexit changes everything for the Scottish independence movement in that both the fact the Conservatives and Labour are both supporting Brexit has shifted the balance of trust in the economic management of the country.

Now, according to the Scottish Social Attitudes Survey, more Scots than not feel that an independent Scotland will be wealthier than it would be as part of post-Brexit Britain.

The polls may show a slow and steady increase in independence support as we close in on the Brexit we didn’t vote for, but it is less about the economic fears around Brexit, as those will not be clear till the final deal, or no deal, is done.

Independence support is rising because trust in the people of Scotland running our own affairs is rising, while trust in the two Unionist pro-Brexit parties is falling. Trust is the key to independence and to prosperity following independence.

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About the author

Gordon MacIntyre-Kemp

Gordon MacIntyre-Kemp is the Founder and Chief Executive of Business for Scotland. Before becoming CEO of Business for Scotland Gordon ran a business strategy and social media, sales & marketing consultancy.

With a degree in business, marketing and economics, Gordon has worked as an economic development planning professional, and in marketing roles specialising in pricing modelling and promotional evaluation for global companies (including P&G).

Gordon benefits (not suffers) from dyslexia, and is a proponent of the emerging New Economics School. Gordon contributes articles to Business for Scotland, The National and Believe in Scotland.

1 Comment

  • Inspiring points in this article about the sociological and psychological benefits of living in a trusting and equitable environment, and that’s the kind of world, and the kind of Scotland I think all would agree that most people want. Those that have difficulty with this will find that their cognitive dissonance is aided by mainstream media – the conduit of vested interest of the rich and powerful – to maintain the inequality that we have become used to over the last 40 years of neoliberalism.

    But I need to clarify the matter of currency. Currency is not purely a matter of social trust. Certainly, people have to trust that it is worth something, but that trust is not an unspoken social agreement. That kind of trust is not what gives currency value.

    Imagine, shortly after independence, Scotland issues its own £Scot. A sovereign currency. Nobody has any of these £Scot notes, because the Scottish govt has not yet spent any of them into existence (yes, that’s how money is created – it gets spent into existence (check the Bank of England quarterly bulletin 2014).

    But no one is willing to accept the new £Scot, because they don’t trust it. How does the Scot government create the ‘trust’ it needs in its new currency?

    The Scot government requires by law that next April your taxes must be paid in £Scot. No other currency will be accepted. Suddenly the whole private sector needs to acquire some £Scot before April.

    The value of the currency is then established by what the private sector has to do to get the currency from the government.

    The power this gives an independent country is immense. It is the way all monetary sovereigns work. It also corrects the usual back to front ‘tax and spend’ narrative that is touted in mainstream media. How can a government tax people without first ensuring there is enough money in their possession to pay the tax?

    There are probably a few people wondering: “Well if the government creates money as it spends first and then has to tax later, why on earth do they need to tax at all?” Firstly, as it has been pointed out, to give value to the currency, secondly money has to flow. Taxation helps create continual demand, and at the same time, by removing money from the economy, creates fiscal space for more spending, to keep the flow going. Tax also serves other purposes. You can reduce it to promote good things, and raise it to deter bad things (smoking etc). You can use it to highlight the value of a particular service (TV licence as an example).

    So why have we got a national debt at all if the government creates money? Because of the standard accounting procedure of double entry bookkeeping. Every time a transaction happens, an account is debited somewhere and an account is credited somewhere. If you add up all debits and credits in the country, it all comes to zero. In the case of the government, it debits its account at the central bank and spends the money – into the private sector. That’s how we all have savings, money in the bank and pension funds etc. All talk of repaying the national debt is nonsensical. It should not be called the ‘national debt’ at all – what it really represents is the private sector – ours, yours and my ‘national savings’.

    “So why does the government sell bonds – surely that is how they borrow money from the private sector – it’s the businesses that create wealth.” OK – that’s the standard narrative. But have you considered, just where does the private sector get the money from in the first place to buy those bonds? “It earns it, by selling stuff to people and providing services, yes?” OK – so where do the people buying those goods and services get money from? This process could go on for some time, and there’s no way out of that cycle, you can’t break out of it except when you come to the realisation that the government is the ultimate source of money in the economy.

    “But banks lend money, they create it when they create loans! The banks are where all the money comes from. They have the monopoly on money creation” It is true that banks are allowed to make loans in the country’s unit of account. But the big difference between commercial bank lending and central bank spending is… at some point the money borrowed from the banks has to be repaid. At some point the loans are repaid and all the money that was created is now returned (plus the interest of course), and when repaid the resulting balance is – you guessed it – zero (remember for every debit there is always a matching credit).

    The only way the private sector can accumulate a surplus is when the government is in deficit. The ‘national debt’ is our nest-egg.

    That’s what money is, what money does, and how money works.

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